Lilly tops estimates despite shrinking Cymbalta sales

January 30, 2014

Eli Lilly and Co., which is projected to hit a six-year low point in sales this year, on Thursday reported fourth-quarter profit that beat analysts’ estimates, as sales gains in other products blunted a decline for its top-seller, Cymbalta.

Earnings excluding one-time items were 74 cents a share. Analysts expected 73 cents a share, the average of 12 estimates compiled by Bloomberg.

Sales fell 2 percent, to $5.81 billion, compared with the $5.46 billion analysts projected. The company is bracing for declining revenue this year as top-selling treatments for pain and schizophrenia have lost market share to cheaper generic medicines.

“We haven’t wasted the crisis as the old saying goes,” said CEO John Lechleiter. “We’re more agile. We’re leaner. I think we’re better operators today. And I believe that will help,” he said on a conference call discussing results.

The company’s push in diabetes -- where it plans to have a drug in every therapeutic category -- is a large part of its effort to get sales growing again. Generic copycats eviscerated revenue from products such as osteoporosis treatment Evista and Zyprexa for schizophrenia, and Cymbalta, a pain medicine.

Cymbalta lost patent protection in December, and fourth- quarter sales fell 38 percent, to $883 million, from a year earlier. Revenue from treatments for diabetes and erectile dysfunction helped make up for that loss.

Profit declined 12 percent, to $727.5 million, or 67 cents a share, from $827.2 million, or 74 cents, a year earlier, the company said.

The drugmaker isn’t interested in a large merger or acquisition to build sales, Lechleiter said. “On the pharma side, we continue to have no appetite for large-scale M&A,” he said.

Lilly fell 1.3 percent, to $53.22 each, Thursday morning. The shares have struggled over the last 12 months, gaining 3 percent, compared with a 20-percent increase in the Standard & Poor’s 500 Pharmaceuticals Index.

“The stock had been in the doldrums for a number of years, partly because of the lack of anything new coming from the pipeline and partly because of its extensive ’patent cliff,’” said Timothy Anderson, an analyst with Sanford C. Bernstein & Co., in an investment note.

Investors should still be wary even with the increased sales of some products, said Alex Arfaei, an analyst with BMO Capital Markets Corp. who has an underperform rating on the stock.

“While the top-line performance seems impressive, we believe it should be interpreted with caution because it was primarily dependent on price increases in the U.S. and some wholesale buying patterns,’ Arfaei said in a note to clients. ‘‘We continue to believe that such pricing leverage is not sustainable.’’


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